Collateral Services

Treasury Collateral Programs

The Federal Reserve Banks, in their role as fiscal agent for the United States Treasury, provide collateral services for the programs discussed below. Collateral for these programs may be held in book-entry form through the Federal Reserve's National Book-Entry System (NBES) or in definitive (physical) form through your local Reserve Bank. In some cases, a third or fourth-party custodian may maintain collateral.

Treasury Tax and Loan (TT&L) (31 CFR Part 203 Program)

The Treasury Tax and Loan (TT&L) Treasury Investment Program (TIP) enables your financial institution to collect federal tax payments from your customers and retain these funds at a competitive rate of interest. As a tax depositary, you are required to pledge acceptable collateral to secure federal tax payments with your local Federal Reserve Bank in an amount equal to your TT&L account and/or TIP Main Account.  Information regarding the TT&L program can be found in the TT&L Reference Guide. (PDF)

Acceptance of Bonds Secured By Government Obligations in Lieu of Bonds With Sureties (31 CFR 225)

Under this program, individuals, partnerships, or corporations required by U.S. law or regulations to furnish a surety bond to the federal government may pledge acceptable securities as collateral in lieu of a surety bond. The collateral value must equal the amount of the required surety bond and may be deposited at a Federal Reserve Bank.

Depositaries and Financial Agents of the Federal Government (31 CFR 202)

This program applies to financial institutions required to pledge acceptable securities as collateral to secure deposits of U.S. federal program agencies held by the financial institutions.

The Financial Management Service (FMS), a bureau of the Department of the Treasury (Off-site Link) is responsible for oversight of the TT&L program, 31 CFR 225 Program and the 31 CFR 202 Program, including collateral pledged to secure public funds. The regulations regarding these programs can be found on the FMS site referenced above.

Important Notice: As announced in a recent customer communication, the functions and services related to collateral monitoring for the 202 and 225 collateral programs via the TT&L Plus® application will be transitioned to the Treasury Collateral Management and Monitoring (TCMM) application on December 12, 2011.

The Treasury Collateral Management and Monitoring system (TCMM) is a centralized system focusing on collateral handling, valuation, and monitoring for the Treasury collateral programs described above. TCMM will provide Financial Institutions, Federal Program Agencies, the Treasury, and the Federal Reserve Bank of Philadelphia collateral operations staff the ability to manage account balances and the Amount to Be Collateralized (ATBC), and monitor collateral balances and deficiencies. TCMM will also compare collateral values to account balances or the ATBC and provide notification of deficiencies. TCMM is a web-based application, replacing the legacy mainframe system TIP and its web interface application TT&L Plus, which will be decommissioned.

Transition Resources:

For information about the functionality and user interface changes in TCMM versus the TT&L Plus application please review our User Comparison Guide (PDF)

For information on how to set up access in TCMM for anyone who needs access please review our TCMM User Setup Guide (PDF).

For more information on Treasury collateral programs, click here (Off-site Link).

Safekeeping Systems

National Book-Entry System (NBES)

NBES is the electronic facility operated by the Federal Reserve Banks for maintaining Securities Accounts for book-entry securities issued in electronic form by the United States Government, any agency or instrumentality thereof, certain international organizations, or others that the Federal Reserve Banks have determined are eligible to be held in NBES ("Fedwire® securities"). The Federal Reserve Banks' Operating Circular 7, Fedwire Securities Account Maintenance and Transfer Services, sets forth the terms under which the Federal Reserve Banks maintain Securities Accounts and effect transfers of book-entry securities.

Collateral Management System (CMS)

CMS is an application operated by the Federal Reserve Banks that maintains a record of and values collateral pledged in non-Fedwire book-entry or definitive (physical) form for all Treasury collateral programs administered by the Federal Reserve Banks.

Collateral Valuation

Collateral values for the TT&L Program are calculated based on margins that are applied either to the available market price or, where market prices are not available, the par or outstanding principal balance.

Borrower-in-Custody Arrangements

Qualified pledgors may be allowed to maintain specified categories of definitive collateral on the pledgor’s premises, referred to as a Borrower-in-Custody of collateral (BIC) arrangement. Collateral may be held in a BIC arrangement for the TT&L Special Direct Investment Program and Term Investment Option. The pledgor must be in sound financial condition, meet documentation requirements and demonstrate that the collateral is of acceptable credit quality.

The Federal Reserve Banks reserve the right, at any time, to require the pledgor to deliver collateral held in a BIC arrangement to either a Reserve Bank or a custodian designated by the Reserve Bank.

Third/Fourth-Party Custodian Arrangements

If you are interested in third- or fourth-party custodian arrangements, your local Federal Reserve Bank will assist you in establishing an appropriate arrangement.

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